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Lloyds Banking Group has hired a former partner and managing director at Goldman Sachs on more than £1m (€1.1m) a year to run its capital markets business, in one the most high-profile investment banking hires this year and one of the biggest yet for the embattled UK bank.

James Garvey, who retired as chairman of European debt capital markets at Goldman Sachs earlier this year, joined Lloyds Banking Group today as its new head of capital markets and advisory, according to banking sources with knowledge of the situation.

The new hire is a coup for the UK bank given Garvey was central to building out Goldman Sachs’ European investment-grade debt financing business across sovereign, agency, corporate and financial institution sectors in the four years before he left the broker.

Garvey’s hire is also one of the strongest signs yet of Lloyds’ ambition to expand and develop its capital markets franchise.

Sources close to the situation said that Garvey is being paid a basic salary of over £1m a year, but that total compensation will likely be substantially higher once performance related pay is taken into account.

A spokeswoman for Lloyds Banking Group, said: “We do not discuss the details of individual pay packages. As a commercial organisation we would always look to reward people in an appropriate and prudent fashion.”

Garvey was unavailable for comment.

In a statement from Lloyds, Garvey said: “Lloyds’ lending business has always been well respected in the European capital markets and its bond business has built a good reputation very quickly. Lloyds’ focus on developing new product lines around its client franchise is very compelling and I look forward to continuing this growth story over the coming years.”

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In his new role Garvery reports to Andrew Géczy, managing director of the wholesale markets division,

After joining Goldman’s fixed-income division in 1999, Garvey made managing director in 2001 before transferring to the investment banking division in 2004, when he made partner and was handed the position of head of European DCM.